South Sudan: Will Oil Lead It Out of Poverty?

South Sudanese security forces stand outside the control room of the Petrodar oil facility in Paloich, South Sudan. Sudan was once sub-Saharan Africa's third-largest oil producer, but much of that oil came from what is now South Sudan.

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Originally published on December 14, 2011 6:12 pm

South Sudan, the world's newest nation, is still trying to find its feet, and private companies, international aid experts and diplomats have gathered in Washington this week to see if they can help.

The 5-month-old country is one of the most underdeveloped places in the world, and it still has many lingering disputes with its former rulers in Sudan — disputes that could scare off potential investors.

Secretary of State Hillary Clinton kicked off the two-day International Engagement Conference for South Sudan by likening the new state to a tiny infant in need of intensive care.

She talked about the challenges facing a country that has few paved roads and little in the way of infrastructure. But, she said, one thing South Sudan does have going for it is potential oil wealth — and that needs to be well-managed.

"South Sudan defied the odds simply by being born," Clinton said. "We know that [the oil] will either help your country finance its own path out of poverty, or you will fall prey to the natural resource curse, which will enrich a small elite, outside interests, corporations and countries, and leave your people hardly better off than when you started."

Clinton urged South Sudanese President Salva Kiir to look at Norway and Botswana as examples of countries with well-managed natural resources.

Kiir told the audience that he is working on transparency rules and hopes for big investments. He pointed out that the American oil company Chevron was the first to discover oil in the region, but war and U.S. sanctions have kept American companies out.

Will American Companies Invest?

Now, Kiir said, the Obama administration is changing its licensing rules and making it possible for American energy companies to invest.

Kiir told the crowd, "I want to invite you today to come with me to South Sudan after this conference to help develop our potential in oil, gas and mineral resources."

But he also appealed for patience, saying the challenges are great for a country born out of decades of war, and acknowledging ongoing tensions with Sudan.

Sudan accuses South Sudan of arming rebels in two regions in the north, which South Sudan denies. Princeton Lyman, U.S. envoy for both Sudans, has been keeping a close watch on the situation along the border.

"It is a flashpoint," Lyman says, "not that we think the two are going to go to war in that sense, but the conflict on the border [and] the clashes that take place raise a lot of tension, and they impact on the ability of the two to negotiate other issues."

And the two Sudans have many outstanding issues to negotiate. Lyman thinks the North should focus on those negotiations as well as on its own financial woes, having lost a lot of its oil wealth and territory to the South.

"What we are saying is this is no time to go to war in three or four of the states of your country," Lyman says. "It is important to get a negotiated solution to the oil sector with the South."

The tensions between the two Sudans were high on everyone's mind at the conference in Washington, even as South Sudan tried to encourage investors to bring their money and ideas to the world's newest nation.

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Transcript

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Private companies, international aid experts and diplomats are gathered in Washington this week, all to help the world's newest nation get on its feet. South Sudan's challenges are great. It is one of the most underdeveloped places on Earth and it has many lingering disputes with its former rulers in Khartoum.

As NPR's Michele Kelemen reports, fresh fighting along the border between the two Sudans is making the U.S. and other donors nervous.

MICHELE KELEMEN, BYLINE: Secretary of State Hillary Clinton compares South Sudan to a tiny infant in need of intensive care.

SECRETARY HILLARY CLINTON: Yes, the work ahead is not quick nor easy, but neither was winning independence. South Sudan defied the odds, simply by being born.

KELEMEN: She kicked off the two-day conference talking about the challenges facing a country that has few paved roads and little in the way of infrastructure. It does, though, have oil wealth and Clinton says that needs to be well managed.

CLINTON: We know that it will either help your country finance its own path out of poverty or you will fall prey to the natural resource curse, which will enrich a small elite, outside interests, corporations and countries, and leave your people hardly better off than when you started.

KELEMEN: Clinton urged President Salva Kiir to look at Norway or Botswana as examples of countries with well-managed natural resources. Kiir told the audience that he is working on transparency rules and is hoping for big investments. He pointed out that it was Chevron that first discovered oil in the region, but war and U.S. sanctions have kept U.S. companies out.

Kiir says the Obama administration is changing its licensing rules and now making it possible for U.S. energy companies to invest.

SALVA KIIR: I want to invite you today to come with me to South Sudan after this conference, to help develop our potential in oil, gas and mineral resources.

KELEMEN: Kiir appealed for patience, saying the challenges are great for a country born out of decades of war. And he acknowledged ongoing tensions with former rulers in Khartoum.

KELEMEN: Sudan accuses the South of arming rebels in two regions in the North - charges the South denies. The U.S. envoy for the two Sudans, Princeton Lyman has been keeping a close watch on the situation along the border.

AMBASSADOR PRINCETON LYMAN: It is a flashpoint, not that we think the two are going to go to war in that sense. But the conflict on the border, the clashes that take place, raise a lot of tension and they impact on the ability of the two to negotiate other issues.

KELEMEN: The two Sudans have many outstanding issues to negotiate. Lyman thinks the North should be focused on that and on its financial woes, having lost a lot of its oil wealth and territory to the South.

LYMAN: And what we are saying is this is no time to go to war in three or four of the states of your country - Southern Kordofan, Blue Nile, Darfur, et cetera. And it is important to get a negotiated solution to the oil sector with the South.

KELEMEN: The tensions between the two Sudans were high on everyone's mind at the conference in Washington, even as South Sudan tried to encourage investors to bring their money and ideas to the world's newest nation.